“Significant economic damage” is a “price worth paying.” But businesses are not so sure.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
Europhiles hoping that time might heal or at least narrow the rift separating the UK and the EU after last year’s Brexit vote are likely to be sorely disappointed by the findings of a new poll jointly conducted by Oxford University and London School of Economics.
The survey reveals that there is more support for harder Brexit options because Leavers and a substantial number of Remainers back them. The survey’s findings bolster the case for the hard-Brexit-or-nothing position favored (at least publicly) by British Prime Minister Theresa May. The alternative — a so-called “soft” Brexit — would imply having to accept full freedom of movement for all EU citizens in return for some form of privileged access to the single market. Given that regaining control of UK borders was one of the key issues that swung the referendum in Brexit’s favor, such a proposition was always unlikely to sway a majority of British voters.
This new poll, for which 3,293 people were consulted, appears to be confirmation of that. A majority of Brits, including many Remainers, largely concur that Brexit should mean the UK taking back control over its borders, leaving the jurisdiction of the European Court of Justice, and paying only a small “divorce bill” to the EU.
Professor Sara Hobolt of the LSE – one of the research’s authors – says that although neither Remain or Leave voters were showing signs of regretting how they voted, it seems that Remain voters are less unified behind a soft Brexit than Leave voters are behind a hard Brexit.
“Our results imply that Leavers are united in strongly favoring a ‘hard Brexit’ because they are generally more likely to oppose any deal that involves continued freedom of movement of people, jurisdiction of the ECJ, and a very large ‘divorce settlement’,” she said.
“In contrast, Remainers are more divided, with the majority favoring a ‘soft Brexit’ but others favoring aspects of a ‘hard Brexit’. Overall, this means that there is on aggregate higher levels of support for outcomes that resemble the ‘hard Brexit’ position put forward by the government.”
There’s a sound logic to this gambit. Under a soft Brexit, the UK would essentially continue to face most, if not all, of the impositions, costs, burdens and other drawbacks of being in the EU while wielding even less influence — as in no influence at all — over how arrangements might change in the future. As such, the only option that offers the UK any prospect of self-rule in the foreseeable future, which was ultimately what the referendum vote was all about, is that of a hard or clean Brexit.
With 68% of the respondents in the survey saying they would opt for hard over soft Brexit and another 67% saying they would prefer “no deal” to soft Brexit, the survey’s finding offer the strongest hint yet that public support in the UK is coalescing around a hard, clean break from the EU — even it means paying a high price! According to a recent You Gov poll, 61% of those who voted to leave the EU said they consider “significant economic damage” as a “price worth paying” for quitting the bloc.
Many UK businesses would beg to differ, in particular those with large markets to serve and protect on the continent. This week, six major British business chiefs told Reuters there’s still too much uncertainty around post-Brexit immigration, trade and regulation to be able to plan and make coherent investment decisions.
“I see through a glass darkly. It’s hard to discern exactly what is happening at the moment,” Rupert Soames, CEO of British outsourcing group Serco said.
London’s huge financial center has its own set of fears, particularly over rival capitals coveting its most valuable operations. The City of London Corporation, the UK’s state within a state, is being reacquainted with one of the basic tenets of statecraft: countries don’t have friends, only interests. In July the Corporation’s special representative to the EU, Jeremy Browne, bemoaned in a private memo that was subsequently leaked to the media that the French are plotting to “actively disrupt and destroy” the UK’s financial sector when Britain leaves the EU.
During the past week further instalments of Browne’s private correspondence have been disclosed by the press. His biggest concern this time around is Brussels’ aggressive moves on the City’s crown jewel: its €900 billion euro clearing business. “Nobody disputes that [London’s euro clearing] system currently works in practice, but the EU27 (or, more specifically, the Eurozone) has a supervisory and quasi-nationalistic desire to prevent business continuing as usual in London post-Brexit,” Browne said.
Clearly, the Corporation would much prefer that a gentlemanly solution can be found to the problem — preferably one that leaves its undisputed predominance over global financial markets in tact. As Browne puts it, “if it ain’t broke, don’t fix it.” For the UK banks and businesses that have strong trading ties with EU economies, the biggest threat right now is that attitudes continue to harden, not only in the UK but also on the other side of the English Channel.
An important ray of hope for them is the wafer-thin majority the government has in parliament in the wake of the last elections. As such, the British public may increasingly want a clean break from the EU but the deeply divided Conservative Party in government may have trouble delivering it. By Don Quijones.
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